That lent support to UMC’s previous statement that the first quarter would be the trough of this down cycle driven by inventory reduction. As clients have started to rebuild inventory, UMC expects shipments to grow 15 percent this quarter, from 963,000 8-inch equivalent wafers last quarter.

Net income rose 36 percent to NT$1.34 billion (US$45 million) during the quarter ending March 31, from NT$980 million in the final quarter of last year. On an annual basis, first-quarter net profit plunged 70 percent, from NT$4.48 billion a year earlier.

Operating margin improved to 5.6 percent last quarter, from 3.4 percent in the fourth quarter, a company statement showed.

Despite the solid recovery in demand, UMC did not change its capital spending plan of US$2 billion for this year — most of which will go into developing advanced 28-nanometer (nm) technology.

“The lead time for 28nm capacity deployment is long. It is unlikely to boost capacity for short-term demand,” Sun said.

Besides, UMC plans to adjust its capacity for 65nm chips to make 28nm chips to satisfy clients’ demand, he said.

Meanwhile, rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is set to upgrade its capital spending for this year to more than the record US$7 billion it spent last year, citing insufficient capacity to meet customers’ demand for 28nm chips.

UMC plans to ramp up production of 28nm chips in the second half as scheduled, Sun said. The chipmaker expects 28nm chips to account for 5 percent of its total revenue by the end of this year.

UMC’s board also approved a proposal to issue NT$20 billion in corporate bonds as part of its plan to seek strategic partners.

In addition, the board gave the green light to acquire another 65 percent of Chinese chipmaker HeJian Technology (Suzhou) Co (和艦科技) to increase its stakeholding from the current 30 percent to about 90 percent. The company said it would cost about NT$190 million to acquire the 65 percent stake.